Recent studies have shown the importance of peptides in neural function. These neuropeptides are formed from precursor molecules by specific cleavage of peptide bonds catalyzed by endopeptidases. Endopeptidases also participate in neuropeptide degradation. We have isolated two new endopeptidases from rabbit brain which can generate and inactivate neuropeptides. These enzymes are maximally active at a neutral pH. The first enzyme, a high molecular weight cation-sensitive neutral endopeptidase, preferentially cleaves bonds between hydrophobic and small neutral amino acids. A preparation of this enzyme was shown to generate methionine enkephalin from Alpha-endorphin and leucine enkephalin from synthetic precursor molecules. This endopeptidase may participate in enkephalin formation in vivo. The enzyme is inhibited by low concentrations of Na+ and K+ implying a role for these cations in the regulation of its activity. The second enzyme, prolyl endopeptidase, hydrolyzes peptidyl prolyl peptide and peptidyl prolyl amino acid bonds in model substrates and in neuropeptides such as substance P, neurotensin, thyrotropin hormone-releasing hormone, bradykinin and angiotensin II. The biochemical properties of the enzymes will be explored in greater detail and the relationship between the subunit structure of the enzymes and their catalytic properties will be studied. The regional and subcellular localization of the enzymes in brain will be determined and the enzymes will be localized by immunocytochemical techniques. Active site directed peptide aldehyde derivatives will be synthesized as potential inhibitors of the enzymes. Such inhibitors should be of value in assessing the role of these enzymes in the control of the formation and degradation of neuropeptides. Such inhibitors may also lead to the design of a class of neurally active drugs capable of modifying functions of the brain related to the action of neuropeptides.